Accounting Problems

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Please see the attached file.

Record transactions. Prepare the journal entry for each of the following
transactions that occurred during the first year of operations at ShermanCo.

a. Issued common stock for cash
shares 400,000
par $6.00
total cash $2,400,000

Cash 2,400,000
Common Stock
(400,000 shares x $6.00) 2,400,000

When Sherman Co.issued common stock for cash, they will receive the cash, in which we
need to debit the cash account and credit the common stock for 400,000 shares.

b.At the beginning of the year, borrowed cash from the Lindquist National Bank
and signed a note.
amount borrowed $350,000
interest rate 6%
note due in 4 years

Cash 350,000
Notes Payable 350,000

Sherman Co. borrowed the cash from the Lindquist National Bank and signed the note. It
means that they received cash. So, we need to debit cash and credit notes payable.

c. Incurred and paid salaries for the year.
amount $250,000

Salaries Expense 250,000
Cash 250,000

When Sherman paid for salaries, we need to debit salaries expense and credit
cash account.

d. Purchased merchandise inventory, paying part in cash and the rest on account.
amount paid in cash $300,000
amount on credit $275,000

Inventory 575,000
Cash 300,000
Accounts Payable 275,000

We need to debit the inventory account and credit cash and accounts payable. Since both
debit and credit account has to be equal, we can find the amount of inventory purchased by
adding cash and accounts payable.

e. Sold inventory on credit.
inventory cost $280,000
total sales $410,000

Accounts Receivable 410,000
Sales 410,000

Costs of Goods Sold 280,000
Inventory 280,000

When Sherman Co. sold inventory on credit, we need to debit accounts receivable and credit
sales account. As Sherman Co. uses perpetual inventory system, we need to record the
cost of goods sold when the sales is made. So, we debit the cost of goods sold account and
credit inventory account.

f. Paid rent of $121,000 on the sales facilities
during the first 11 months of the year

Prepaid rent 121,000
Cash 121,000

When Sherman paid for rent on the sales facilities in advance, we need to debit prepaid rent and credit
cash account.

g. Sold inventory for cash
inventory cost $200,000
total sales $290,000

Cash 290,000
Sales 290,000

Costs of Goods Sold 200,000
Inventory 200,000

When Sherman Co. sold inventory for cash, we need to debit cash account and credit
sales account. As Sherman Co. uses perpetual inventory system, we need to record the
cost of goods sold when the sales is made. So, we debit the cost of goods sold account and
credit inventory account.

h. Purchased store equipment, paying part in cash and
the rest on credit
equipment price $150,000
cash paid $65,000
remaining due in 90 days

Equipment 150,000
Cash 65,000
Accounts Payable 85,000

We need to debit the equipment account and credit cash account and accounts payable
account.

i. Paid the following outstanding debts
for store equipment $75,000
due to suppliers $100,000

Accounts Payable 175,000
Cash 175,000

When they pay the outstanding debts, which would be recorded in accounts payable account,
we have to credit cash account and debit accounts payable account.

j. Incurred and paid utilities expense for the year.
amount $28,000

Utilities Expense 28,000
Cash 28,000

Utilities paid in accounting record is known as utilities expense. It is the debit account.
So, when the transaction said that there is incurred and paid utilities expense, it means that
they pay in cash. We need to debit utilities expense and credit cash account.

k. Collected cash from customers during the year for credit sales
previously recorded.
amount $375,000

Cash 375,000
Accounts Receivable 375,000

We will debit cash and credit accounts receivable.

l. At year-end, accrued interest on the note due to Lindquist National
Bank.
amount $21,000

Interest Expense 21,000
Interest Payable 21,000

As the interest is accrued, we will debit interest expense and credit interest ...